American Eagle For Sale

[L1011Ret]

I went to the president's conference in MIA. Someone asked Arpey about recall extensions for F/As. To the delight of my ears, Arpey referred to the TWA transaction as an "ASSET PURCHASE". The fact is AA acquired TWA's assets in a Chapter 7 liquidation bankruptcy sale; Compton stated this when the deal first came out. And Princess is right, Allegheny-Mohawk was followed to the letter for mechanics and related and ramp, so the TWAers need to take her advice and shut their pie holes.

Also twaokc, I mean, swdriver, if your twisted wishful scenario of AE taking over AA were to occur, I highly doubt that AE would honor AA's agreement to provide TWA Inc. retirees with retiree medical.

A bankruptcy AA insisted upon. As the president of TWA stated, "it wasen't my idea." TWA was not in bankruptcy and was not threatened in the near future. And who are you to tell others to shut up, playing GOD again?

 

[donttouchthebeauty]

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Well "BB", I've got mixed feelings about "this".

But it appears OBVIOUS, NOW is a good time to consider ALL angle's !

First off(beauty are you watching ???) AA NEVER does ANYTHING Impulsively !!!!!!

That said, IF this thing turn out to be successful like the Sabre spin off, no harm/no foul.

Next, is to decide which routes to keep(AA), and which to let go. If it's to let routes.."GO", this is another step towards the GREAT ONE(s) plan of years Ago(CRANDALL)

This "could' free up AA/AMR to make Embraer..."An offer they CAN'T refuse"(Very typical of AA), and negotiate a pay rate for Ejets w/APA, and PRESTO, a sh!t load of well needed Ejets.
OR,

Do what NW is doing,.............create a "new" Eagle (of sorts), but under the AA certificate.

Bottom Line ??


I don't give a fuuk HOW they do it, just get the MUCH needed Ejets...painted, and flying
It would be similiar to having the F-100's back, but at a co$t savings.

I am watching, and listening.. But why oh why, would anyone want to farm out more flying on a 170 - 175, to a regional.. Hopefully if they do get the 170 it is done in mainline scope, and they don't allow it to be farmed out like US and UAL and NWA and DAL... I smell something fishy going on though.. This timing is right at negotiation time and there was a very different tune not so long ago when this was being pondered..

 

[will fix for food]

There's only one way this could make long-term economic sense to me. With today's fuel prices, a large fleet of <50-seat RJ's isn't economically viable (CASM is too high), so if AMR could sell off Eagle, not be committed to use them for express feed, use that money to get a fleet of larger RJ's/E-jets (along with either scope relief to allow using them or flying them on mainline), it could be a good move for the company. Getting the scope relief or mainline pay rate agreement would be the key, though.

but just selling Eagle off only to continue using them for express feed doesn't make sense to me.

Jim

Eagle is being told that they will remain the feed provider and I don't really see what choice American has about it. XJT has about 70 free 50 seaters and there are some Saabs in the desert but other than that everything is under contract with another carrier. What would it take to replace Eagle's 300 airplane fleet? American would have to get ALL of Skywest or ALL of Mesa. Why would Skywest go to the expense of breaking their current contracts and repainting their planes just to fly for AA if all they were going to receive was the current average block hour rates? (That is what Eagle charges American in Arpey bucks BTW) AA would have to pay a premium to them I would think. If that were the case, not only is real money now leaving the corporation, but the price of feed just went up.

If AMR got SCOPE relief they could fly the larger jets at Eagle and not have the revenue leave the company. As far as the mainline pay rates go, AMR would need the pilots to buy into a cheaper rate than Eagle. IMO it would have to be substantially cheaper to make up for the premium that AA mechanics, FAs , rampers, etc, get compared to Eagle's employees. How low would they go? I thought this contract was about getting back the money.

On the other hand, maybe Carty over at Virgin America made AMR a good offer for a turn key feeder operation. Hmmmm... Will Eagle turn into Little Virgins?



I dunno. This still doesn't make sense.

 

[will fix for food]

A month ago Eagle employees were being told that the airline was going to park some planes because they didn't have enough pilots to fly them.

A couple weeks ago the APA, ALPA, and AMR came to an agreement allowing Eagle pilots to get AA seniority numbers and all of a sudden they announce that Eagle is going to BUY 25 more planes.

That deal falls through and all of a sudden AMR is going to listen to the bozo at FL, who they dismissed about a month earlier, and divest Eagle.

I don't know, but something smells fishy about all this.....

And another thing that I forgot:

AMR was looking for scope relief from the TWU in recent negotiations.

Another piece of the puzzle?

 

[Maark767]

A bankruptcy AA insisted upon. As the president of TWA stated, "it wasen't my idea." TWA was not in bankruptcy and was not threatened in the near future. And who are you to tell others to shut up, playing GOD again?

Oh lets just throw them ( TWA ) into BK for the fun of it.... Had nothing to do with TWA finacials... TWA was a strong money making company .. Right???
Oh please.... there days were numbered...

 

[The Dissident]

Its not a big mystery why AMR wants to sell off Eagle. TO BREAK THE PILOTS UNION!!!!!!!!!!!!!!!!!.

 

[will fix for food]

Uh-oh. AMR stock is back down to what it was before the announcement. They better spin off AAdvantage too. M&E if that doesn't work. If that doesn't work maybe they can split the narrow body ops off under a seperate certificate and spin them off too. Better keep going until FL can get a good enough price to dump their stock.

 

[FWAAA]

There's only one way this could make long-term economic sense to me. With today's fuel prices, a large fleet of <50-seat RJ's isn't economically viable (CASM is too high), so if AMR could sell off Eagle, not be committed to use them for express feed, use that money to get a fleet of larger RJ's/E-jets (along with either scope relief to allow using them or flying them on mainline), it could be a good move for the company. Getting the scope relief or mainline pay rate agreement would be the key, though.

but just selling Eagle off only to continue using them for express feed doesn't make sense to me.

Jim

You and will fix for food said it better than I did. Selling/spinning off/whatever Eagle means that AA will have to pay SOMEBODY real, honest to god profit dollars on its regional lift, something it currently does only at STL with Chautauqua and TransStates. Even at a fairly low margin, that is potentially $150 million to $200 million a year out the door, unless AA can work a deal that doesn't involve cost plus guaranteed profits.

And who would pay real money for Eagle if it didn't have contracts in place with AA? Well, maybe there are enough suckers out there. Perhaps the Icelandic wunderkind investors at FL Group will pony up some fresh cash to buy part of Eagle? They were stupid enough to accumulate lots of AMR as it climbed toward $41 late last year and early this year - so maybe they'd be willing to do it again? They've proven they ain't real bright.

Maybe AA makes tremendous profits on its Eagle flying. If so, sharing some of that with an independent Eagle owner wouldn't be the end of the world, especially if AMR could dupe someone into paying billions of dollars for Eagle. But if AA does make huge profits at Eagle, why not keep those in-house? I just don't get it.

 

[LGA Fleet Service]

I really don't think AMR intends to separate Eagle from the mother ship.I don't see paying another lift provider 'real money' as indicated above instead of keeping it in the AMR piggybank.

The language they used in the press release puts so many caveats on the potential sale of Eagle you'll probably see consolidation in the rest of the legacy space before a successful spin off of Eagle takes place.

"The company expects to complete the divestiture in 2008;however, the completion of any transaction and its timing will depend on a number of factors, including general economic, industry and financial market conditions, as well as the ultimate form of the divestiture."

 

[Veritas]

Uh oh, someones "divesting" their AAssets... Gotta love you guys... Talk trash about other airlines selling off assets, and then AMR is the first one to turn around and divest.. Love the big red hand print from the BiAAtch slap in the face...Fab U Lous.... Perfume away -- Spritz spritz and splash...

CNN Money talks about AA profit margins, which aren't as good as some might seem to think.. hmmm

People who live in glass houses should not cast stones. I suggest that you read what BusinessWeek has to say about UAL in the Nov. 21 issue:

United and its parent, UAL, are in a real jam. And a sale may be the best option for the iconic airline...

United, like many other carriers, filed for bankruptcy after the 2001 terrorist attacks. But it missed a major opportunity in Chapter 11 to remake itself into an airline that could compete with both low-cost carriers at home and foreign airlines abroad, industry experts say.

United emerged from bankruptcy in early 2006, yet it is saddled with relatively high debt, and its profit margin, 2% over the last 12 months, remains one of the thinnest in the industry, not even half US Airways Group's (LCC) 4.4% or Southwest Airlines' (LUV) 6.1%. "They didn't push as hard in bankruptcy to transform the business model, and they've been playing catch-up ever since," says Stuart Klaskin, an airline industry consultant in Coral Gables, Fla. "And it's clear that Tilton now believes a merger is the road home."

One sign of that is United's extended pause on fleet expansion. While other carriers have begun placing orders for new planes, the Chicago company says it plans to rely on its existing fleet of 460 jets until 2015 or 2016. By then the planes will be 20 years old, on average.

Tilton is exploring asset sales that would lower United's debt and make it a more attractive partner. The $20 billion carrier is exploring the spin-off of its frequent-flier program, Mileage Plus...

It's also looking into the sale of a partial stake in its maintenance operations and perhaps its cargo business to private-equity investors. That would raise billions of dollars in cash, strip down United to its core assets—planes and routes—and make it more enticing to a suitor.

To make a United merger doable, Tilton may have to first broker peace with his employees, who are still seething over the sharp pay cuts forced on them in bankruptcy. Flight attendants, now getting 1985 pay levels, want more money. "You can't run a service business when you're at war with your employees," warns Greg Davidowitch, president of the Asso­ciation of Flight Attendants at United. Nor is such workplace strife a big selling point for potential United merger partners.

Ouch!!!

 

[FWAAA]

I really don't think AMR intends to separate Eagle from the mother ship.I don't see paying another lift provider 'real money' as indicated above instead of keeping it in the AMR piggybank.

The language they used in the press release puts so many caveats on the potential sale of Eagle you'll probably see consolidation in the rest of the legacy space before a successful spin off of Eagle takes place.

"The company expects to complete the divestiture in 2008;however, the completion of any transaction and its timing will depend on a number of factors, including general economic, industry and financial market conditions, as well as the ultimate form of the divestiture."

Excellent voice of reason - as you pointed out, the divestiture isn't cast in stone.

 

[eolesen]

Lots of stuff floating about here...


Timing is to boost share price = BUSTED I thought about that for five seconds. Unfortunately, the professional analysts pretty much see this as a non-event, so the price is actially dropping.


1. Will Eagle still lease operations space within AA's SOC and HDQ

Presumably, they stay put unless they opt to find their own space. Eagle already pays AA thru transfer pricing for the space they occupy in HDQ, SOC, and even airports, albeit at lower rates than if they were the primary lessee.

There is a potential loss of revenue for AA if Eagle were to move their training to their own facility

Disagree -- there's a potential increase in revenue if AA can resell sim time and space with a higher margin to someone else. Eagle probably gets favorable pricing right now.

2. How many Eagle employees will try to transfer to AA to forego a loss of benefits, a la SABRE spin off.

Good luck trying. Very few of the Sabre folks managed to make it back, mainly because there weren't many IT jobs left.

At a managers meeting yesterday, Bowler announced that he'd be staying with Eagle, and it appears that most of the senior management team there is more or less locked into the same. Presumably, they were given retention incentives not to try and jump ship back to AA. I'd assume the same might happen with other management positions.

3. How this may affect non-rev rules for both Eagle and AA

They'll probably negotiate something similar to when Sabre left.



I see the potential for a couple of things here, but will hold off until after PBB goes to press.

 

[AirLUVer]

As I posted before, this end of year announcement is to pump up the share price. Which in turn, will pump up the PUP. I think that HDQ was thinking more about share prices in comparison to other airlines. As long as AA ends up with stronger share performance in comparison to the other majors, they end up with higher PUP multipliers.

I agree it is very suspect that AMR included the caveat of market and economic conditions to the timing, method, AND probability of this divestiture.

I disagree that AA could find another air carrier willing to lease space at AA's flight academy, in the event of Eagle being bought by another carrier. Eagle is probably the "owner" of the ERJ and S340 sims and AMR would be unable to sell that equipment separately from the Eagle sale/spin off.

The big problem with non-rev rules will affect mostly commuting pilots and flight attendants.

 

[The Goose]

Eagle is being told that they will remain the feed provider and I don't really see what choice American has about it. XJT has about 70 free 50 seaters and there are some Saabs in the desert but other than that everything is under contract with another carrier. What would it take to replace Eagle's 300 airplane fleet? American would have to get ALL of Skywest or ALL of Mesa. Why would Skywest go to the expense of breaking their current contracts and repainting their planes just to fly for AA if all they were going to receive was the current average block hour rates? (That is what Eagle charges American in Arpey bucks BTW) AA would have to pay a premium to them I would think. If that were the case, not only is real money now leaving the corporation, but the price of feed just went up.

If AMR got SCOPE relief they could fly the larger jets at Eagle and not have the revenue leave the company. As far as the mainline pay rates go, AMR would need the pilots to buy into a cheaper rate than Eagle. IMO it would have to be substantially cheaper to make up for the premium that AA mechanics, FAs , rampers, etc, get compared to Eagle's employees. How low would they go? I thought this contract was about getting back the money.

On the other hand, maybe Carty over at Virgin America made AMR a good offer for a turn key feeder operation. Hmmmm... Will Eagle turn into Little Virgins?



I dunno. This still doesn't make sense.

It makes perfect sense if you consider the main purpose of the announcement was to drop more mud into already roiled water. Probably has more to do re: playing 'chess' or 'chicken' with the APA than anything else.

As eoleson pointed out, the anal - ists are treating this as a 'non-event', which leads me to believe any spinning of anything will be to the corporate officers' benefit and won't happen until all the ducks are in line for a major executive payout.

Rather than an outright sale, a spin-off and subsequent issue of stock would be more to the execs liking as they can play the 'stock bonus charade' once more.

Whatever happens, it will be structured for maximum executive profit and maximum damage to the workers - damn any benefit to the company or lack thereof.

 

[L1011Ret]

Oh lets just throw them ( TWA ) into BK for the fun of it.... Had nothing to do with TWA finacials... TWA was a strong money making company .. Right???
Oh please.... there days were numbered...

Testimony from former members of the TWA Board of Directors indicates bankruptcy was chosen as a way to get rid of Carl Icahn's Karibu arrangements.